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3232US Department of Labor Announces Intention to Repeal Tip-Pooling Regulationhttp://www.csemploymentblog.com/2017/07/articles/employment-policies-and-practi/us-department-labor-announces-intention-repeal-tip-pooling-regulation/
http://www.csemploymentblog.com/2017/07/articles/employment-policies-and-practi/us-department-labor-announces-intention-repeal-tip-pooling-regulation/#respondThu, 27 Jul 2017 17:11:25 +0000http://www.csemploymentblog.com/?p=1988As set forth in its July 20, 2017 Regulatory Agenda, the United States Department of Labor (“USDOL”) has announced its intention to rescind the controversial 2011 regulation enacted by the Obama Administration (the “2011 Regulation”), which restricted employers from requiring employees to share tips even when no tip credit is taken and tipped employees are paid the full minimum wage.

The 2011 Regulation established that tips are the property of the employee and thus cannot be forcibly distributed to other workers even if no tip credit is taken and the employee receives the full hourly minimum wage. 29 C.F.R. § 531.52. By way of background, the Fair Labor Standards Act (“FSLA”) contains a tip credit provision, which allows employers of tipped employees the option of paying a reduced hourly wage rate of $2.13 as long as employees receive sufficient tips to bring their hourly rate to the applicable federal minimum wage. If an employee does not receive sufficient tips to meet the minimum wage, the employer must pay the difference but the employee is also permitted to retain all extra tips. 29 U.S.C. § 203(m). The tip credit provision has resulted in disparity in the incomes of tipped employees and non-tipped “back of the house” kitchen employees. For this reason, many restaurants and hospitality associations have turned to “tip-pooling,” which many believe allows for a more uniform distribution of income.

Following the enactment of the 2011 Regulation, courts have split as to the proprietary of the Regulation with the Tenth Circuit (covering Colorado, Kansas, New Mexico, Oklahoma, Wyoming and Utah), Fourth Circuit (covering Maryland, North Carolina, South Carolina, Virginia and West Virginia) and Eleventh Circuit (covering Alabama, Florida, and Georgia), holding that the Regulation is not valid and does not apply where an employee is paid the applicable minimum wage. In contrast, in February 2016, in Oregon Restaurant and Lodging Association v. Perez, the Ninth Circuit held that the FLSA is silent on the question of whether employers who do not take a tip credit can use tip-pooling and, therefore, the USDOL could impose a regulation to fill the gap, thus finding the Regulation to be valid. The National Restaurant Association and other hospitality groups have asked the United States Supreme Court to grant certiorari to resolve this issue and that request is pending.

As the USDOL’s proposal to rescind the 2011 Regulation is subject to the rulemaking process, it will take some time to actually rescind the rule. Accordingly, employers outside of the Tenth, Fourth and Eleventh Circuits, including those in the Tristate Area, should continue abiding the 2011 Regulation until further notice.

Importantly, employers must also be mindful of similar state laws. For example, New York employers in particular should note that New York’s Hospitality Wage Order and Labor Law restricts tip-pooling participation.

]]>http://www.csemploymentblog.com/2017/07/articles/employment-policies-and-practi/us-department-labor-announces-intention-repeal-tip-pooling-regulation/feed/0Paid Family Leave May Be Expanding in New Jersey Under Proposed Legislationhttp://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/paid-family-leave-may-expanding-new-jersey-proposed-legislation/
http://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/paid-family-leave-may-expanding-new-jersey-proposed-legislation/#respondWed, 21 Jun 2017 13:00:27 +0000http://www.csemploymentblog.com/?p=1985Last week, a bill was advanced by the State’s Senate Budget and Appropriations Committee to the Senate for discussion and vote. If passed, the new bill will increase the benefits and protections currently afforded under the State’s Family Leave Act and Family Leave Insurance (a component of the New Jersey Temporary Disability Benefits Law) and allow employees to take paid time off to care for infants or sick family members without losing their job.

While New Jersey is currently one of the few U.S. states to offer paid family leave, benefits are currently limited to 53% of the State’s average wage with a weekly payout capped at $633 per week (in 2017). Under the proposed legislation, an eligible employee would be entitled to double the time of paid time off within a one-year period, increasing from 6 weeks under current Family Leave Insurance up to 12 weeks under the new proposed legislation. In cases of intermittent leave, the bill would likewise double the maximum number of days from 42 to 84 days.

The benefit would also increase from two-thirds of an employee’s average weekly wage to 90% — subject, however, to the maximum of 78% of the statewide average wage for all workers making the new maximum benefit under the proposed legislation approximately $932 per week.

Finally, the proposed legislation would also increase the number of employees eligible for benefits under the new family leave provisions. While current legislation requires employers with 50 or more employees to provide family leave without risk to the employee’s employment, the new legislation would reduce that number to 20 or more employees. The new law would also expand the definition of family members to include siblings, grandparents, grandchildren, and parents-in-law. Under the current legislation, only an employee’s spouse, children, and parents are included under the family leave provisions.

We will continue to post updates about the status of the bill and, if passed, the new law’s effective date.

]]>http://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/paid-family-leave-may-expanding-new-jersey-proposed-legislation/feed/0New Fair Workweek Legislation Scheduled to Take Effect On NYC Fast-Food Chains and Retailers in November 2017http://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/new-fair-workweek-legislation-scheduled-take-effect-nyc-fast-food-chains-retailers-november-2017/
http://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/new-fair-workweek-legislation-scheduled-take-effect-nyc-fast-food-chains-retailers-november-2017/#respondMon, 19 Jun 2017 15:22:44 +0000http://www.csemploymentblog.com/?p=1982New York City Mayor Bill de Blasio recently signed a package of legislation known as the “Fair Workweek” bills, which will take effect on many of the city’s fast-food chains and retailers starting in November 2017. The package, comprised of five separate bills, includes the following (the first four of which apply specifically to fast-food eateries, and the last to retailers more generally):

1396-A: When new fast-food employees are hired, employers will be required to provide them with good faith estimates of their work schedules. For both new and existing employees, employers will also have to provide all workers with 14 days’ notice of their actual schedules. In addition to providing the schedule directly to the individual employees, employers must clearly post that schedule in the workplace. If changes are subsequently made to the schedule, the impacted employees must be paid a bonus ranging between $10 and $75 per instance depending upon how close in time to the shift the change occurs and whether the change is increasing or decreasing the shift time/hours. Notably, an employee is not required to work additional hours that were not included in the initial schedule, and any consent to do so must be memorialized in writing.

1388-A: Fast-food employees will no longer be forced to work consecutive shifts where they close one day and open the next unless at least 11 hours have elapsed between the conclusion and the start of the shifts. However, in the event that an employee consents in writing to work such a consecutive shift, the employer will be required to compensate the employee an additional $100.

1384-A: Fast-food employees will be able to direct their employers, in writing, to take deductions from their paychecks in order to make voluntary contributions to non-profit organizations. It will be the employer’s obligation to then remit payment directly to the selected non-profit. Employers, however, are not required to honor an employee’s request for such contributions unless the amount designated by the employee is at least $3 per week.

1395-A: Fast-food employers will be required to offer additional work shifts to existing workers before hiring new employees to fill those shifts. Notice of such shifts must be visibly posted in the workplace for a minimum of 3 days. Only if the extra shifts are rejected by existing employees or would subject the employer to paying existing employees overtime can the employer hire additional employees.

1387-A: For retailers employing at least 20 employees in NYC, “on-call” shifts will be banned. Absent specific exceptions (such as natural disasters or requests by employees for time-off or to swap shifts with other employees), retailers will also be prohibited from cancelling or altering work schedules within 3 days of the start of the shift, and such employee schedules will need to be posted at the workplace at least 3 days before the start of the shift.

The Fair Workweek legislation will largely be enforced by the New York City Department of Community Affairs’ Office of Labor Policy and Standards. In certain instances, employees will also have standing to pursue private complaints in court.

While the legislation will not become effective until November, the New York State Restaurant Association has already expressed strong concerns about the impact it will have on the fast-food industry. Not only does it fear that employees may lose flexibility and the ability to maximize their earning potential, but also that employers will likely face increased costs, penalties and administrative complications.

]]>http://www.csemploymentblog.com/2017/06/articles/employment-policies-and-practi/new-fair-workweek-legislation-scheduled-take-effect-nyc-fast-food-chains-retailers-november-2017/feed/0How Today’s Employers Can Avoid the Heat With Their Unpaid Summer Internship Programshttp://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/todays-employers-can-avoid-heat-unpaid-summer-internship-programs/
http://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/todays-employers-can-avoid-heat-unpaid-summer-internship-programs/#respondTue, 30 May 2017 14:00:06 +0000http://www.csemploymentblog.com/?p=1976Memorial Day weekend has come and gone, the weather is getting warmer, colleges are out of session, and high schools are winding down towards final exams. More than just the start of Summer, this means Summer Intern season has officially arrived. As students and job applicants are entering an ever-increasingly competitive job market, resumes beefed up with internship experiences are almost essential in most industries. Today, many go-getters are often willing to accept unpaid internships in return for the educational and first-hand learning experience they will (hopefully) receive in exchange for their labors. On the other side of the table, many employers utilize such internship programs to expose the up-and-coming members of the workforce to their companies and recruit top talent for future full-time employment opportunities.

The rise of unpaid internships, however, has left many employers in hot water by inadvertently misclassifying workers as “unpaid interns” when they are in reality being treated like any other employee of the company – but for the fact that they are not being paid. Many groups of these misclassified unpaid “interns” are suing those employers (often in high-profile class and collective action lawsuits) for wages under the federal Fair Labor Standards Act (the “FLSA”) and corresponding state wage and hour laws. It is therefore essential for savvy employers to understand who may lawfully qualify for unpaid intern positions and how employers should best structure their internship programs.

The FLSA, as a general matter, mandates that all individuals who are “employed” must be compensated for their labors. However, exemptions apply to “trainees,” or people who receive internship training while on the job which furthers their own education. According to the test established by the United States Department of Labor (“DOL”) (see DOL Fact Sheet #71), an internship may be unpaid if:

The internship provides training similar to that obtained in a vocational school setting;

The purpose of the internship is to benefit the intern;

The intern does not displace any regular employee;

The employer does not enjoy any immediate advantage from the intern’s work;

There is no entitlement to a job at the internship’s conclusion (though this does not mean that a job cannot ultimately be offered or earned); and

Both the employer and intern understand that the intern is not entitled to wages.

In addition to the “trainee” test established by the DOL, many states have established their own criteria that employers must consider with respect to unpaid internships. Two such states (and where I focus my practice) are New Jersey and New York. New Jersey, for example, employs the following nine-factor “trainee” test that asks whether:

The training is for the primary benefit of the trainee;

The employment for which the trainee is training requires some cognizable trainable skill;

The training is not specific to the employer (that is, is not exclusive to its needs), but may be applicable elsewhere for another employer in another field or endeavor;

The training, even though it includes actual operation of the facilities of the employer, is similar to that which may be given in a vocational school;

The trainee does not displace a regular employee on a regular job or supplement a regular job, but trains under close tutorial observation;

The employer derives no immediate benefit from the efforts of the trainee and, indeed, on occasion may find his or her regular operation impeded by the trainee;

The trainee is not necessarily entitled to a job at the completion of training;

The training program is sponsored by the employer, is outside regular work hours, the trainee does no productive work while attending and the program is not directly related to the worker’s present job (as distinguished from learning another job or additional skill); and

The employer and trainee share a basic understanding that regular employment wages are not due for the time spent in training, provided that the trainee does not perform any productive work.

Similarly, New York applies a multi-factor test (as to for-profit businesses) that fully incorporates the federal DOL test, but then adds the following supplemental criteria:

Whether the trainee is clearly notified, in writing, that he/she will not receive wages and is not considered an “employee” for purposes of minimum wage;

Any clinical training must be performed under the supervision and direction of people knowledgeable and experienced in the activity;

The training is general and qualifies the trainee to work in any similar business;

The screening process for the internship program is different than that for employees; and

Advertisements, postings or solicitations for the internship program clearly discuss education or training, rather than employment.

With these multi-factor, fact-sensitive tests in mind, companies offering unpaid internships this Summer are well-advised to engage in a self-audit (preferably with the assistance of counsel) to ensure that their programs are in compliance with the law. If companies do not undertake that analysis, their unpaid programs may quickly lead to rather substantial and expensive litigation, penalties and fines. The “penny wise, pound foolish” concept could not be more apropos.

]]>http://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/todays-employers-can-avoid-heat-unpaid-summer-internship-programs/feed/0NYC Pay History Ban to Take Effect October 31, 2017http://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/nyc-pay-history-ban-take-effect-october-31-2017/
http://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/nyc-pay-history-ban-take-effect-october-31-2017/#respondWed, 17 May 2017 17:20:55 +0000http://www.csemploymentblog.com/?p=1970On May 4, 2017, the Mayor of New York City, Bill de Blasio, signed into law a bill that amends the New York City Human Rights Law (the “NYCHRL”), and makes it illegal for employers to inquire about a prospective job applicant’s salary history or to rely on that history during the hiring process. Cole Schotz previously blogged about the proposed legislation on April 7, 2017. The text of the new law can be found by clicking here. The law will take effect 180 days from the date of signing, October 31, 2017.

The amendment to the NYCHRL prohibits an employer, an employment agency, and an employer’s agent or employee, from making inquiries regarding the salary history of an applicant unless certain limited exceptions in the law apply. The amendment defines the term “inquiry” broadly to include not only communicating a question to an applicant or his/her current or former employer about such salary history, but also includes searching publically available records or reports to obtain an applicant’s salary history. The law authorizes the New York City Human Rights Commission to take such actions “as are necessary to implement” the law prior to the effective date.

As noted above, there are limited carve outs in the law regarding when salary history may be discussed. Critically, use of the term “salary history” under the amendment does not prohibit telling the applicant what the salary or salary range is for the position, and also does not prohibit the employer from inquiring about “objective measures of the applicant’s productivity” such as sales or revenue production attributable to the employee. Likewise, an employer is permitted to engage in discussions with the applicant “about their expectations with respect to salary, benefits and other compensation, including, but not limited to unvested equity or deferred compensation,” which may be forfeited by the applicant by virtue of resigning from his/her current employer. Additionally, an applicant can voluntarily disclose his/her salary history to an employer, without prompting, in which case the salary history may be considered by the employer in determining salary, benefits and other compensation, and may also be verified by the employer. The amendment to the NYCHRL also will not apply where the disclosure or verification of salary history is required pursuant to Federal, State or local law, or in the case of internal transfers or promotions.

Employers should inform all employees and agents, including, but not limited to, their human resources professionals and recruiters, of the amendment to the NYCHRL, to ensure compliance by October 31, 2017. Employers should also be mindful to appropriately “revamp” all employment applications and hiring materials to omit any reference to salary history.

]]>http://www.csemploymentblog.com/2017/05/articles/employment-policies-and-practi/nyc-pay-history-ban-take-effect-october-31-2017/feed/0Employers Beware: Facebook Posts May Not Be Enough to Fire Employeeshttp://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/employers-beware-facebook-posts-may-not-enough-fire-employees/
http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/employers-beware-facebook-posts-may-not-enough-fire-employees/#respondTue, 25 Apr 2017 17:06:29 +0000http://www.csemploymentblog.com/?p=1968On Friday, April 21, 2017, the Second Circuit affirmed a National Labor Relations Board (“NLRB”) ruling, which found that Pier Sixty, LLC (“Pier Sixty”) violated the National Labor Relations Act (“NLRA”) when it terminated its employee, Hernan Perez (“Perez”), for comments posted on Facebook.

In 2011, after a supervisor had given directions to Perez and other employees in a “disrespectful” manner, Perez used his iPhone to post a message to his personal Facebook account where he called the supervisor a “nasty mother f*******” and said “f*** his mother and his entire f****** family.” Perez ended his post with “Vote YES for the Union.” The Facebook post came just days before Pier Sixty employees voted to unionize in an October 2011 election.

The post remained on Facebook for three days before Perez removed it. The removal, however, was too little too late. Pier Sixty had already become aware of the profanity-laced post and, following an investigation, terminated Perez on November 9, 2011.

The NLRB, applying a totality of the circumstances test, determined that Perez’s conduct was not “opprobrious” or offensive, and therefore the termination violated Sections 8(a)(1) and 8(a)(3) of the NLRA, which makes it an unlawful for an employer to terminate an employee based on union related activity. On appeal, while giving deference to the NLRB’s findings, the Second Circuit based its affirmance on three main aspects: 1) the subject matter of the message; 2) past practices of Pier Sixty; and 3) the location of the message.

The Court first determined that, even though the post was vulgar, its primary subject matter was of workplace concern. Namely, the Court found that the last five words of the profanity-laced tirade—“Vote YES for the Union”—made the post “part of a tense debate over managerial mistreatment.” Thus, because the comments were not just an “idiosyncratic reaction to a manager’s request,” and rather were connected to the upcoming union election, the subject matter fell within a protected activity under the NLRA.

After finding the subject matter of the post was related to union activities, the Court discussed Pier Sixty’s past practices of tolerating profanity among all employees. The Court noted that there was “widespread” use of profanity among employees and only five written warnings were given to employees for use of profanity prior to Perez’s termination. In fact, there was no evidence presented to the NLRB that any employee was terminated solely for the use of profanity or other offensive language. Based on these past practices, the Court found it “striking” that Perez had been fired for using profanity just days before a Union election was to take place.

Finally, the Court turned to the “location” of the comments – a post on Perez’s public Facebook account. Pier Sixty argued that the comments were made visible to both actual and potential customers, justifying the termination. The Court, however, disagreed. Although customers may have had access to the post, the comments were not made in the “immediate presence” of any customer and did not disrupt any of Pier Sixty’s catering events. Moreover, the Court stated that online forums like Facebook are a “key medium of communication among coworkers” and it acts as a “tool for organization in the modern era.” As such, the Court distinguished the comments from a “public outburst,” finding that the NLRB did not err in determining that the Facebook post was protected activity under the NLRA.

Although the Court recognized that this case was on the “outer-bounds of protected, union-related comments,” the Court’s decision reinforces that employers must be cautious when terminating an employee for speech that is, even loosely, related to protected union activity.

]]>http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/employers-beware-facebook-posts-may-not-enough-fire-employees/feed/0New York Joins Growing List of States to Guarantee Paid Leavehttp://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/new-york-joins-growing-list-states-guarantee-paid-leave/
http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/new-york-joins-growing-list-states-guarantee-paid-leave/#respondWed, 12 Apr 2017 16:24:46 +0000http://www.csemploymentblog.com/?p=1965Beginning next year, New York will become the fourth state in America to guarantee paid family leave for private sector employees. On January 1, 2018, the New York State Paid Family Leave Program (the “Program”) will take effect, providing eligible New York workers with coverage during time away from work.

The Program will be phased in over a four year period, beginning with 8 weeks of coverage at 50% of an employee’s salary in 2018 and rising to 10 weeks of coverage at 55% of salary in 2019, 10 weeks of coverage at 60% of salary in 2020, and maxing out with 12 weeks of leave at 67% of the employee’s salary in 2021. Benefits are capped, however, if an employee’s pay is greater than the State’s average weekly wage which, as of 2016, is $1,305.92.

Three categories of employees are eligible for the program: (1) New parents following the birth or adoption of a child; (2) Employees caring for a sick family member; and (3) Employees with a family member called to active military duty. An employee must fall into one of these three categories and must also have been employed full time for 26 weeks, or part time for 175 days, by a private employer to be eligible.

Under the maternity/paternity portion of the Program, paid leave only begins after birth and is not available prior to the birth of the child. Leave must be taken during the first 12 months following the birth, adoption, or fostering of a child. An employee in New York may also take paid leave to care for a seriously ill relative which includes spouses, domestic partners, children, parents, in-laws, grandparents, and grandchildren. A serious health condition under the Program is defined as an illness, injury, impairment, or physical/mental condition that involves inpatient care in a hospital, hospice, or health care facility or continuing treatment or supervision by a health care provider. An employee in New York can also take time under the Program when a spouse, child, domestic partner, or parent of the employee is on active duty in the military, or has been notified of an impending order of active duty.

Paid leave cannot be used for an employee’s own disability or military event and must be used to care for an eligible family member. The Program will be fully funded by employees, with payroll deductions beginning as early as July 1, 2017. Under the Program, an employer may not discriminate against employees for taking paid family leave and employees are guaranteed to be able to return to their job at the conclusion of their absence.

Private Sector Employers in New York should familiarize themselves with the Program and their attendant obligations. Please visit the blog often for more information regarding when employee payroll deductions will begin under the Program.

]]>http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/new-york-joins-growing-list-states-guarantee-paid-leave/feed/0NYC Pay History Ban: Combating Wage Disparityhttp://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/nyc-pay-history-ban-combating-wage-disparity/
http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/nyc-pay-history-ban-combating-wage-disparity/#respondFri, 07 Apr 2017 18:13:33 +0000http://www.csemploymentblog.com/?p=1963The New York City Council approved legislation on Wednesday, April 5, 2017, which bans NYC employers from relying on past salary history when making hiring decisions. The legislation, known as Introduction 1253-A, is intended to prevent the single interview question: “How much did you make at your previous job?”

Proponents of the legislation suggest that the prohibition will combat gender-based wage disparities by preventing employers from setting wages based on previous salaries and help to end the perpetual cycle of women earning less than men insofar as the distinction is based on past practices. In addition, proponents of the legislation believe that withholding such information from employers will likely create more transparency in the hiring process and force employers to set salaries prior to conducting interviews. With this legislation, NYC joins the ranks of Massachusetts and Philadelphia, which recently passed similar laws.

The legislation, however, is not without its opponents and criticism, and it is expected that lawsuits will be filed prior to its implementation. In fact, on April 6, 2017, the Chamber of Commerce for Greater Philadelphia filed a federal lawsuit challenging a similar Philadelphia law on First Amendment grounds. That lawsuit seeks injunctive relief, alleging that the law unduly burdens an employer’s ability to rely on wage history during the job-application process. NYC employers should pay close attention to the Philadelphia lawsuit as a favorable decision for the Chamber of Commerce will likely influence challenges to Introduction 1253-A.

We will keep our readers updated with respect to the implementation of Introduction 1253-A and any challenges brought against it.

]]>http://www.csemploymentblog.com/2017/04/articles/employment-policies-and-practi/nyc-pay-history-ban-combating-wage-disparity/feed/0Employer-Compliance Obligations and Enjoined DOL Regulationshttp://www.csemploymentblog.com/2017/03/articles/wage-and-hour/employer-compliance-obligations-enjoined-dol-regulations/
http://www.csemploymentblog.com/2017/03/articles/wage-and-hour/employer-compliance-obligations-enjoined-dol-regulations/#respondThu, 16 Mar 2017 19:15:30 +0000http://www.csemploymentblog.com/?p=1955As previously discussed on this blog in a post dated November 23, 2016, the United States Department of Labor (“DOL”), in May of 2016, issued a final rule (“Final Rule”) revising its regulations construing the so-called white-collar overtime exemptions of the Fair Labor Standards Act (“FLSA”). In essence, the Final Rule increased the minimum salary that employers must pay their employees in order to invoke the white-collar exemption, from $23,600 to $47,476 annually, and provided for automatic updates to the minimum salary every three years.

The Final Rule was scheduled to take effect on December 1, 2016, but on November 22, 2016, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction, preventing the DOL from implementing the rule ( Nevada v. U.S. Dep’t of Labor). That litigation continues, and the preliminary injunction ruling is on appeal to the Court of Appeals for the Fifth Circuit. It is unknown whether the Fifth Circuit will uphold the injunction or reverse, and whether the District Court will ultimately vacate the Final Rule or lift the injunction. Resolution of these uncertainties appears to be months away. The Fifth Circuit recently granted the DOL’s request for an extension of time to file its reply brief “to allow incoming leadership personnel adequate time to consider the issues,” and the reply brief is not due until May 1, 2017.

If the District Court lifts the injunction, or the Fifth Circuit reverses, the Final Rule will presumably go into effect, and a troubling question for employers arises: Will courts hold employers liable under the FLSA’s overtime rules based on their failure to comply with the Final Rule since December 1, 2016?

District courts across the country have been wrestling with a similar issue relating to a different set of DOL regulations – those construing the FLSA’s companionship-services exemption. The new DOL companionship-services regulations, set to take effect on January 1, 2015, removed home health care employees of third-party agencies from the ambit of the FLSA’s exemption. However, before the new regulations took effect, a federal judge in the District of Columbia vacated the regulations. Over eight (8) months later, in August of 2015, the Court of Appeals for the District of Columbia reversed the vacatur and upheld the regulations ( Home Care Ass’n of Am. v. Weil ).

Since that time, a distinct split of authority has developed regarding whether employers are liable for overtime for those previously-exempt companionship-services employees during the time that the vacatur of the new DOL regulations was in effect. On the one hand, some federal judges have concluded that the regulations did not require compliance during the period that the vacatur was in effect. In contrast, other federal judges have ruled that, because of the D.C. Circuit’s reversal, the District Court’s vacatur, in essence, never occurred, and employers were required to follow the new regulations as of January 1, 2015. Of course, the latter interpretation puts employers in a distinct quandary to the extent they justifiably relied upon the pronouncements of a district court.

The uncertainty surrounding the effective date (for employer-compliance purposes) of the DOL’s companionship-services regulations may have implications for the obligations imposed by the Final Rule. In the event that the Texas judge’s injunction against the enforcement of the Final Rule is lifted or reversed, it is entirely unclear whether courts will determine that employers were obligated to comply with the Final Rule’s new minimum salary requirement as of December 1, 2016. This lack of clarity is further compounded by the uncertainty surrounding the new administration’s position with respect to the Final Rule and its motivation to pursue the appeal.

Employers who would be affected by the obligations imposed by the Final Rule should carefully evaluate the relevant legal and business risks in determining whether to meet the Final Rule’s minimum salary requirements while the injunction remains in place.

We will keep our readers updated with respect to the state of the law surrounding the Final Rule.

]]>http://www.csemploymentblog.com/2017/03/articles/wage-and-hour/employer-compliance-obligations-enjoined-dol-regulations/feed/05 Tips for Protecting Your Business This Year: The Best Offense Remains a Good Defensehttp://www.csemploymentblog.com/2017/01/articles/employment-policies-and-practi/5-tips-for-protecting-your-business-this-year-the-best-offense-remains-a-good-defense/
http://www.csemploymentblog.com/2017/01/articles/employment-policies-and-practi/5-tips-for-protecting-your-business-this-year-the-best-offense-remains-a-good-defense/#respondFri, 06 Jan 2017 16:52:09 +0000http://www.csemploymentblog.com/?p=1948Whether you are starting a new business in 2017 or gearing up for another year with an existing company, the New Year brings the excitement of fresh opportunities. That enthusiasm, however, should not overshadow employment related legal pitfalls that commonly befall companies and can impact the bottom line through unnecessary litigation. Outlined below are five areas where employers can take proactive measures in 2017 to protect their business. Entrepreneurs and business owners would be wise to take advantage of the energy of a new year to evaluate these areas, reduce the potential for future disputes, and place themselves in a good defensive position should an issue arise.

Proper Worker Classification and Compensation

Business owners both large and small routinely confront issues relating to the accurate classification of workers as “employees” or “independent contractors”, as well as setting the correct compensation for employees’ hourly and overtime work. These determinations are particularly important for employers in 2017, with the anticipated updates to the Fair Labor Standards Act set to take effect, as discussed in more detail previously here. While the enforcement of these new rules remains in limbo due to pending litigation, employers should be prepared to address the impact of the updated wage requirements, both from a financial and practical perspective, in 2017.

Workplace Policies and Procedures

A formal handbook or collection of written corporate policies helps protect a company when disputes arise and ensures uniform application of the company’s expectations for all workers, even in at-will employment situations. Some common policies that employers should strongly consider adopting (or revising) in 2017 include paid vacation and sick leave policies, anti-discrimination rules, equal opportunity employment policies, medical and family leave procedures, social media and/or internet usage guidelines, “bring your own device” parameters, and a company code of conduct, just to name a few.

Adequate Documentation of Business Relationships

Although the “handshake” agreement may be easy to enter and inexpensive, it can create uncertainty and result in arguments down the road. To ensure clarity of expectations for both parties’ duties and obligations in 2017, owners should document relationships among the company’s founders or investors, as well as with customers, executives, vendors, employees, and other service providers. Not every situation calls for an onerous, formal written agreement; sometimes a confirming letter may do the trick. But, executives should avoid the temptation to close any business deal based only on a verbal discussion.

One of the largest assets in many modern businesses is intellectual property, “know-how”, technological advances, or other “secret” information that the company exploits for profit. Protecting such valuable information can be done effectively and efficiently through mechanisms such as Confidentiality Agreements, Non-Competition or Non-Solicitation Agreements, and by registering trademarks and other intellectual property. Formally safe-guarding these assets will not only maintain their value for the company, but it will provide the business with means to prohibit others from utilizing those assets without permission and block former employees from taking those resources with them should they chose 2017 as the year to make a career move.

Insurance Coverage

While some insurance coverage may be required, such as workers’ compensation or disability insurance, other types of insurance may be beneficial to protect a business in the event a dispute arises in 2017. For example, Employment Practices Liability Insurance (EPLI) can cover the costs of defending losses incurred in discrimination, wrongful termination, harassment, and/or retaliation lawsuits. Likewise, Directors and Officers Insurance indemnifies corporate executives for claims brought against them in their corporate capacity. In addition, Key Employee Insurance may lessen the burden of the loss of a high performing or important individual employee in a small business. Employers should consider implementing or expanding the scope of insurance coverage in these categories for 2017.

By starting the New Year on the right foot through adopting or revising these and other areas of habitual discord, business owners may avoid costly and unnecessary litigation. Where a dispute does arise from a venture gone wrong, employers will be happy they invested in these defensive measures as they will be equipped with ammunition to protect the company’s interests.